Vietnam Insurance Market Attractive to Foreign Players

With annual growth of 30 per cent over the last few years, Vietnam’s insurance market is an attractive destination for foreign insurers and insurance brokers.

 

Currently, the country has 16 non-life insurers, eight life insurance companies and one reinsurance company with total assets of VND30.7 trillion dong (US$1.9 billion).

 

Total non-life insurance premiums in 2005 recorded VND5.5 trillion and life insurance premiums VND8.1 trillion.

 

Last year, Vietnam economy made outstanding progresses with the GDP growth of 8.4 per cent, foreign direct investment of US$5.8 trillion, international visitors of 3.43 million, average per capita income of US$619 a year, social investment of nearly US$20 billion or 38.2 per cent of the GDP. These create firm foundations for development of Vietnam insurance amidst ever-deeper international economic integration.

 

Some foreign insurers believe that 15-20 per cent of the population or 11-15.8 million people, are potential customers for life insurers.

 

It is reported that only a modest number of 7 per cent of the country’s population presently have life insurance compared to 15 per cent in Thailand.

 

Last year, the Ministry of Finance licensed new foreign insurers including AIG Group (the US), Prevoir (France), ACE Life (the US), New York Life (the US).

 

Presently, there are seven insurance brokers in Vietnam with life insurance premiums of VND580 billion (US$36.3 milion), accounting for 12.8 per cent of the total last year.

 

According to Vu My Lan, general director of Aon Vietnam, the first insurance broker in Vietnam, although the service has begun growing strongly, it still could not meet demand. “This means the country is presenting a great deal of opportunities for insurance brokers,” said Lan.

 

Foreign brokerages make up 84 per cent of the market share.

 

Financial experts said that weakness of domestic brokers was attributed to weak agent networks, lack of funds and poorly trained employees.

 

The insurance industry witnessed a turning point when the government enacted a decree in 1993 whereby allowing foreign insurers to operate in Vietnam.